GE sank 45 percent in 2017, compared with a 25 percent gain in the Dow, as it struggled with weak demand for industrial products from gas turbines to locomotives and oilfield equipment. Its shares fell as low as $12.50 in premarket trading Wednesday, which would be its lowest closing price since 2009.
“We are focused on executing against the plan we’ve laid out to improve GE’s performance,” the company said in a statement. “Today’s announcement does nothing to change those commitments or our focus in creating in a stronger, simpler GE.”
GE has been by far the worst in the Dow for more than a year while contending with weak demand for industrial equipment and cash-flow challenges. The troubles deepened in January with the news that U.S. securities regulators were probing the Boston-based company’s accounting.
Like GE, the Dow’s importance in markets has waned as institutional investors and exchange-traded funds migrated to broader, capitalization-weighted measures such as the S&P 500. Still, according to the S&P Dow Jones Indices website, about $4.83 trillion is benchmarked to the gauge, with index assets making up $1.1 trillion of the total.
As for GE, “as much as it reflects on the stock price, it’s probably more significant for a retail investor than it is to institutional investors,” Nick Heymann, a William Blair & Co. analyst, said in an interview. He rates the stock outperform. “It’s still a member of the S&P 500. If it was to exit that, there would be a lot more material adjustment for professional portfolios.”
This article was provided by Bloomberg News.